*This post addresses both residential and commercial leases, feel free to scroll down to the section applicable to you.
Are you struggling to make ends meet because of the COVID-19 pandemic? Eviction policies have changed in response to the pandemic, and these can be confusing. Trellis is here to help you wade through the legalese and provide resources for your next steps.
CDC Eviction Moratorium: What it Means for Me
Along with the pandemic stimulus checks, the CARES Act provided a 120-day eviction moratorium for many rental properties. Many CARES Act provisions have since expired, including the eviction moratorium, but the Centers for Disease Control and Prevention (CDC) issued restrictions on residential evictions for nonpayment of rent through December 31, 2020.
If you are unable to pay rent, and you meet the CDC qualifications (detailed below), you must sign a declaration affirming the below factors. You can give this to your landlord as soon as you are unable to pay rent, or you may use it during eviction proceedings. As detailed below, we always recommend starting communications earlier rather than later.
Have used best efforts to try to secure available government assistance for rent or housing;
Either expect to make no more than $99,000 in 2020 (or no more than $198,000 if filing a joint tax return), was not required to report any income in 2019, or have received a $1,200 stimulus check under the CARES Act (or $2,400 for taxpayers filing joint returns);
Are unable to pay their full rent or make a full housing payment due to a substantial loss of household income, loss of work or wage hours, lay-offs, or extraordinary out-of-pocket medical expenses;
Are using best efforts to make timely partial payments; and
Would likely become homeless, need to move into a shelter, or need to live in close quarters with others in a new residence because of a lack of available housing options.
If these requirements are satisfied, an eviction proceeding must be stayed (stopped) until the Order’s expiration on December 31. In order for the declaration to be effective, a signed copy must be submitted to the landlord or the person who has the legal right to evict or remove the tenant.
Local Orders
The Allegheny County Court of Common Pleas issued an Order of Court related to nonpayment of rent. If the CDC Order does not apply to the landlord-tenant action, the local Order provides for extended scheduling relief.
This time extension allows for the processing of rent-relief program applications or for parties to apply for these programs if they have not already done so. If the CDC Order applies and the tenant has signed the above-mentioned declaration and the Court determines that the tenant provided a copy to their landlord, the matter will be stayed until the expiration of the CDC Order.
We understand this is still confusing and stressful, so we recommend these resources locally.
Commercial Lease Considerations
Unfortunately, the moratorium DOES NOT apply to commercial leases, even though we know times are tough for businesses too. For commercial leases, it’s almost always what is in the lease that governs what rights you have. It’s wise to consult with counsel in these circumstances to see what rights and remedies are available to you as a leaseholder.
Your lease might have a force majeure clause that could excuse your inability to perform for unforeseen reasons beyond the party’s control that were not caused by any fault or negligence by the non-performing party. Courts are reluctant, however, to enforce these clauses. They will generally only do so when the reason leading to the non-performance was explicitly outlined in the force majeure clause. It is important to review your lease and determine if a force majeure clause exists.
The defenses of impossibility and frustration of purpose can also be raised. These claims are based on the fact that the purpose the lease was made for can no longer occur (such as when businesses were forced to completely shut down or are at very limited capacity), but keep in mind that these defenses can be hard to litigate and expensive as well.
For landlords with commercial tenants having difficulty paying rent, please keep in mind it will likely be difficult and costly to find a new tenant during this health crisis.
The best outcome for both parties would likely be to adopt a new payment schedule during this ongoing pandemic, such as rent reduction or rent deferral for a few months. This could help both the tenant and the landlord stay economically afloat until this pandemic subsides.
NOTE: It’s important to document any changes to the rental policy in writing to avoid any further issues. If you need any help with contracts, please reach out. Trellis has experience helping commercial tenants and landlords navigate these difficult discussions and draft lease changes.
Resources
Resources for Residential Renters:
Allegheny County Cares Rent Relief Program (deadline Nov 4th, 2020) is the Allegheny County program carrying out the CARES Act funding for rent relief. You can get up to six months of assistance for rent due between March and December 2020. Payments will be based on the actual rent due in your living situation up to $2000/month per renter/lessee. Payments will be made directly to the landlord as long as the landlord provides their required documents.
Rent Help PGH is a local affordable housing organization in Allegheny County dedicated to connecting renters to rent relief services. Their website includes a list of organizations in our community that have jumped in to help connect renters to the services they might need. The Housing Authority of Pittsburgh has put together a similar list for residents of the City of Pittsburgh.
The federal Consumer Financial Protection Bureau has put together some information about mortgage relief options and protections, including a walkthrough that homeowners can use to see if they qualify for temporary relief.
The Urban Redevelopment Authority of Pittsburgh has compiled lists of COVID-19 resources for residents and businesses. Both lists include tools that folks can use to bridge gaps in their finances right now.
Resources for Commercial Tenants:
The Urban Redevelopment Authority of Pittsburgh has compiled lists of COVID-19 resources for residents and businesses. Both lists include tools that folks can use to bridge gaps in their finances right now.
NAIOP Pittsburgh, a commercial real estate development and ownership association, has outlined COVID-19 response strategies to help smooth over some rent-related difficulties that commercial property owners and their tenants might encounter because of the economic toll that the pandemic has had on small businesses.
DISCLAIMER: This blog post is meant for informational purposes only and does not constitute specific legal advice or create an attorney-client relationship. Readers should discuss their specific situation with an attorney.